How to raise money to start a business – Crowdfunding? Why LenderKit gives you real estate crowdfunding software?
You can use money from your savings, borrow from friends, or interest from financial institutions to start your business. But crowdfunding may be one way.
What is Crowdfunding
In the world of financing, we can come across one interesting name, which is Crowdfunding. This method of alternative non-bank financing is mainly used by individual artist applicants. Another sector is emerging companies with non-traditional business plans.
The reason companies or even individuals use this method of financing is that they usually cannot get traditional loans from banks or non-banks.
Since this is a relatively new method of raising funds, it is not yet well known. However, its future is very promising. In practice, crowdfunding can be divided into two basic types.
- Donor-driven – these can be charitable, social, or political collections.
- Investment – the investor expects high returns in the future.
But crowdfunding is not necessarily the only way to finance a project. In some cases, it may only be a complementary method. This is the case when a bank or non-banking company provides only limited funds in the form of a loan.
- Crowdfunding investing can also involve real estate.
- The fact that the initial financial investment can be minimal makes this method of investment available to virtually everyone.
So, it is a community for your funding for new projects. It is essentially a group of people coming together to do a project that does not yet exist, but which these people love very much. Therefore, such a project only exists in the world in the form of an idea, a sample product, or a partial realization.
How it works
You have an idea, but no money to implement it. So you only create a sample product, you prepare a presentation of what you want to produce (it can be a product, a service, whatever). And on the Internet, where these ideas meet with those who want to support this or that idea, you say – I will produce this and that and for so much. And your future customers will look at your idea, and if they like it, they will buy it. So they will buy a product that does not yet exist (subscribe to it).
Example. You know you want to sell these bikes for 20,000 crowns. You create a presentation of your bike, and if at least 50 people pre-order your non-existent bike, you will have an investment of one million on hand, which you can use to launch your project. If you don’t raise that amount, the money goes back to the parties involved, you get nothing, and obviously, the bamboo bike won’t be the hit you hoped for. And you’re better off forgetting about such a project. If you raise a lot more money, it will be a very good sign that there is interest in your product and that you are on the right track.
Where to raise money?
There are many global crowdfunding sites where you can raise money. LenderKit will help you get into crowdfunding on your own!
Of course, these sites take a commission for arranging contact between you and your first clients, but it is up to you to decide if this type of financing is right for you or not.
- you can raise money quickly to get your business up and running.
- you get feedback, you learn about the market if there is interest in your project
- If you are successful in getting funding, you will gain some customers you will not lose
- provide the first outlet for your products
What are the benefits of crowdfunding investing
1. the possibility of investing with small capital
When investing, you don’t need to have millions of dollars of capital, as you do when buying an investment home. With crowdfunding investment, you can invest with much smaller amounts, usually from $10-100k. This is especially appreciated by novice investors.
2. no property management
All matters regarding the management of the property you invest in fall into the hands of the investment company. You, therefore, do not have to worry about finding tenants, repairs, and much more, which saves you not only a lot of time but also costs.
3. diversification and lower risk
Since more people are involved in investing in the project, thanks to crowdfunding, the risk decreases. There is typically not just one property in the project, as would be the case when buying an investment home, so the risk of the project failing is reduced.
How LenderKit works?
The startup helps to collectively invest in real estate and works with intermediaries around the world. How can you invest collectively? And cross-border? The process is simple. First, the investor registers and then confirms his identity. Once these steps are successfully completed, in the investment environment, you will get an overview of all investment opportunities currently offered by LenderKit. After loading money into your wallet, you can start investing. Everything works online, and it is up to the investor whether he chooses a project in his country or abroad. Investments start from small amounts from 100 euros for projects in euros.
What are the benefits and risks of co-investing? What types of real estate can be invested in this way? Real estate crowdfunding invests in two main types of investment opportunities: equity and loans. In the case of equity, the investor becomes an equity investor (shareholder) in the company that owns the relevant property. In the case of debt investments, the investor lends money to the project company that is responsible for the relevant project.
Technically, the investor “participates in the income from the real estate project”. Based on the investment opportunities we have analyzed (over 10,000 projects), approximately 85% of the opportunities are debt and the rest are equity.
- For properties in your home country or city and anywhere else in the world
- Crowdfunding in real estate is a rapidly developing industry with very fast growth.
Globally, the largest market is the United States of America, where tens of billions of dollars have already been invested in real estate crowdfunding.